Immigrants are a valuable asset to the United States, both culturally and economically. And as such, we need policies that maximize the benefits of immigration while protecting U.S. and foreign workers alike from unemployment, poor working conditions, and downward pressure on wages. The Migration Policy Institute has published a new report that will make reaching those goals easier. It recommends that the United States annually adjust the number of immigrant workers we admit depending on whether the economy is experiencing a period of expansion or recession.
It seems like common sense to suggest that high levels of immigration are not always beneficial, and by the same token that the United States should avoid restrictive immigration policies that do not respond to the needs of employers and the American economy. That's why this new study by University of California, Davis economist Giovanni Peri, entitled The Impact of Immigrants in Recession and Economic Expansion, is so important--it demonstrates through highly technical econometric analysis that this common sense notion is correct.
Peri concludes that the United States should allow employment-based legal immigration because it benefits the economy over the long run. But there can be negative economic impacts in the short run -- and in order to minimize them, legal immigration should be reduced when the U.S. economy experiences a downturn. Peri suggests that a government commission could determine the right number of work visas to grant.
Currently, the number of legal immigrants admitted into the United States each year is totally unconnected to the number of available jobs. The reason is simple: Congress has set a fixed yearly limit on the number of new immigrants who may enter the country to work, regardless of the unemployment rate or labor market needs.
With unemployment high even among college grads, how important is it for U.S. employers to recruit foreign workers, be they computer programmers, janitors, or hotel staff? In today's labor market, new lower-skilled immigrants not only compete with other workers who possess the same basic skills, but also with higher-skilled workers who are having difficulty finding a job within their area of expertise. Recessions put downward pressure on wages, as more and more workers are forced to accept lower wages for positions with an oversupply of potential applicants.
With unemployment currently at 9.5 percent - and projected by the Congressional Budget Office (CBO) to remain over 9 percent through the end of 2011 - there are plenty of available workers in the United States (both native and foreign born) who can fill many job openings. During periods of high unemployment, employers should be required to recruit U.S. workers more extensively throughout the country (not just in their home city or region) before they are allowed to recruit abroad. And when the labor market is booming, visa quotas can be adjusted upward.
As Peri suggests, an independent commission should determine the overall level of immigration in the United States and the corresponding number of work visas granted each year. Both former Secretary of Labor Ray Marshall and the Migration Policy Institute have proposed models for such an entity: the Foreign Worker Adjustment Commission or the Standing Commission on Labor Markets, Economic Competitiveness, and Immigration, respectively.
One key measure for determining work visa levels would be the unemployment rate, but the commission could use other indicators, too, such as vacancy rates, wage growth, and survey information. For example, when unemployment is high and real wages are stagnant or falling, the commission could recommend that Congress authorize a lower number of work visas for the year, but when unemployment is very low or job vacancy rates are high, it could recommend a proportionately increased number of visas. Other information from employers, unions, and government officials would round out the commission's analysis.
Although one might disagree with some of Peri's specific policy solutions, he has contributed an excellent study with important findings. Its key contribution is to show through careful econometric analysis that common sense - in this case, that the impact of immigration is different when unemployment is 10% compared to 4% - is indeed correct. This is no small matter considering the millions of dollars spent every year to convince others to ignore or reject common sense. Only once they have agreed on the facts can advocates and policy makers move forward with effective legislative reforms. Peri's work will help us do that.
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